Death Spiral for Big Oil and Big Auto

All fossil-fuel vehicles will vanish in 8 years in twin ‘death spiral’ for big oil and big autos, says study that’s shocking the industries

That’s a pretty big title – but the article itself is long – and the Good News is that you can actually download the report in question and read it for yourself.

There are two things happening at the same time – the rise of the electric vehicle and the imminent prospect of cars that drive themselves. Put those two together, and people will give up owning an expensive internal combustion engine behemoth and take a ride in a shared autonomous vehicle – which may even have no cost to the user for the trip.

Obviously this kind of disruption is going to have huge knock on effects, and not surprisingly the report itself has plenty to read without getting into the details of what this does to cities that already experience traffic congestion and rely on public transit systems. One thing that I see is that if you can get a free ride in a self driving Uber then there is going to be a lot more vehicle trip kilometers than there are now. Our urban systems are already stressed at peak periods – and while these cars will have better occupancy and utilisation rates than the present fleet, they will still be competing for a finite amount of road space at peak periods and the simple geometry of traffic congestion will not have changed at all. So there will still need to be transit – and if there isn’t a need for a driver there may still need to be a chaperone!

We invite you to join our community of thought leaders and experts to better inform this conversation. To learn more, please visit www.rethinkx.com.

One thing we seem to be getting quite wrong is the idea that we will need pipelines to export Alberta’s very expensive to produce bitumen. Building the Kinder Morgan expansion for a very limited life seems very wasteful to me. Much better to embrace the change and start getting ready for what’s coming anyway.

U.S. producers will be hit the hardest by the volume effect, as almost 15 million bpd of US oil — or 58% — will become uncommercial to produce at $25.4 cash cost. Likewise, more than half of oil production in Canada, Brazil, Mexico, Angola and the U.K. will be stranded.

6 Responses

Stephen wrote: “while these cars will have better occupancy and utilisation rates than the present fleet, they will still be competing for a finite amount of road space at peak periods and the simple geometry of traffic congestion will not have changed at all. So there will still need to be transit”

This is what most advocates of self-driving cars seem to be missing. People who look down on ride sharing today aren’t likely to suddenly change their attitude overnight – so I’m very skeptical that the number of single-occupancy vehicles is going to change much. And since self-driving cars will make multiple trips in and out of the city during commuting peaks it’s going to end up increasing congestion. All of the wonderful benefits of sharing may reduce the need for parking spaces, but as far as I can see they’re not going to do anything for congestion.

The good news is that self-driving and electric buses are going significantly reduce the cost of transit, and perhaps that will encourage its use.

I am not sure that you can actually “increase congestion”. It seems to me that over time it settles back to a just quite not acceptable norm that we put up with. There is peak spreading but the general pattern is that outside of those peaks congestion is usually a temporary phenomenon due to collisions, road works or visiting Popes. Most of the time there is no congestion. For instance today I had to drive to two different locations on essential errands but between 1 pm and 2:30 everything was fine – except for the construction on Cambie which was easy to drive around on Heather. But after 2:30 the home going rush starts with the school run and everything slows right down. And between midnight and six there’s almost no traffic at all!

A fascinating article. I, too, do not see AVs and EVs affecting the demand for expensive, vast road infrastructure and can only hope that the transit + land use duet comes to fruition in more areas.

However, switching out the energy source has a certain satisfaction in bringing the demise of Big Oil a lot quicker, at least theoretically as espoused in the article. What is illuminating is that this idea is coming from the Financial Post, and alludes to business and tech innovation doing what no carbon policy has done before. I especially like the beautiful comparison of Tesla’s 18 moving parts to the average internal combustion car. India and China will no doubt pump out AEVs by the tens of millions.

One wonders how long pipelines will be fought over here in BC if this scenario arrives within a decade.

Another idea that twigged during a deeper read of some key chapters in the report is that it may not be as easy to introduce AVs at first when so many other cars with human operators will still be out there. It stands to reason that it may not be as quick of a transition as alluded to in the report. The authors placed deep energy into the research and calculations, but how do you account for human behaviour, and tech failure? The most cogent factor to willful conversion seems to be the potential cost savings for shared AVs over personal private ownership. Money talks, and it may help lessen the discomfort of getting into a car with strangers who share your destination, or a car that may not exactly be clean after a Saturday night of drunken calls from the Entertainment District.

I see this whole idea coalescing into the equivalent of several driverless taxi fleets on steroids offering better prices by eliminating the cost of a driver. Sean above alluded to driverless buses and therein overall savings on transit costs by greatly eroding labour costs, which are a major component in the operating costs column. Seeing that public transit in the Metro already recovers almost 50% of operating costs through the farebox, it’s feasible that the system could up that to 90% or better.

Then, of course, you still have to maintain the roads upon which AEVs will drive. How will that be possible if the prediction of the demise of the oil industry comes true and gas taxes are no longer available? Should the AEV-world come to pass, it may actually be easier to establish road pricing on a per-kilometre driven basis as part of the licencing of these vehicles, and a portion of the revenue needs to be directed to transit. Road accidents are sure to diminish dramatically, and with them the related healthcare costs, which currently are astronomical. Should AEVs really take off, then the numbers of cars on the roads will undoubtedly decrease. However, even if a reduction of 1/3rd is achieved, that still leaves a million cars on the roads in the Metro, and a massive hunk of urban land still consumed by them.

The need for public transit may hold steady, but with a diminished workforce due to automation. But the need to continue to foster smart growth and efficient land use will still need to be strongly promoted though emissions will drop from the list of reasons why. But I think per capita energy consumption will jump to the top of the discussion once the electrical requirements and new generating capacity and transmission infrastructure to operate several EV fleets becomes obvious, even though the demand may level out with the storage capacity of batteries.

Instagram

Follow Us

Disclaimer, Copyright notice, about and contact information

In a time of universal deceit, telling the truth is a revolutionary act.
- George Orwell

All of this blog is my copyright under the Berne Convention. While brief quotations are permitted action will be taken against anyone copying entire posts and presenting them as if they were their own.

Although comments on this blog are moderated, I can take no responsibility for the opinions or remarks made by others. Their continued presence on this blog cannot be taken to indicate my approval of them and they remain the sole responsibility of their authors.

Akismet is catching a huge volume of spam. Unfortunately, it is also catching some real comments. However, it takes a huge amount of work to trawl through literally thousands of spams looking for one or two real comments.
If your comment did not appear, please contact me.
Details on the about page.

Search for:

Categories

Categories

Who am I and what is this

I am a transportation economist and regional planner, displaced from England by the abolition of the Greater London Council and a dislike of Thatcherism. Until March of 2004 I worked for the Greater Vancouver Transportation Authority on wide variety of policy issues. None of these have been solved since I left, and the region has abandoned its long established growth strategy altogether, as the province expanded its major highways and is now proposing another new bridge over the Fraser. I have long advocated more sensible policies to better integrate transport and land use. And this blog is a way to keep up the pressure! It also allows me to vent a bit on related issues.